Hacker News Reader

Comment by jordanlev | Hacker News Reader

> Rule #11: Create a bulletproof portfolio for protection.

> The portfolio should assure that your wealth will survive any event — including an event that would be devastating to any individual element within the portfolio. In other words, this portfolio should protect you no matter what the future brings.

> It isn't difficult or complicated to have such a portfolio this safe. You can achieve a great deal of diversification with a surprisingly simple portfolio.

What could such a portfolio be? Cash in a savings account? (Genuine question from an investment novice -- I always thought any investment was risky to some extent).

View on HN

HB's Permanent Portfolio consists of 25% each cash/gold/stocks/long term bonds

25% stocks (index fund) Stocks – for profit during periods of general prosperity and/or declining inflation.

25% Gold – for profit during periods of bad inflation; during inflationary episodes gold bullion provides protection against a falling currency and other potential problems.

25% Long Term Bonds (30 year) – for profit during periods of declining interest rates; and especially during a deflation. Bonds also do reasonably well during prosperity.

25% Cash – During a recession, no particular asset class is going to do well. The cash in a Treasury Money Market Fund offers stability when portfolio asset classes fall in price. It also protects purchasing power during a deflation.

I would add that gold is an asset that does well when people lose faith in the dollar. It's insurance against the unthinkable.

yeah but there, other currencies make more sense.

This is also intended to be a simple portfolio that your grandma can operate.

For example?

euro, pound, yuan, yen

well is this advice of 25% applicable in this day and age, have we moved past precious metals occupying such a large percentage?

That percentage has been and will be debated forever, even by proponents of the Browne PP model, but 4x25 has done well as recently as the past two decades.

Also the exact number is not all that critical. Earlier versions of Browne’s portfolio were more complicated and he simplified it to 4x25 later on, still allowing that people could tweak it if they must. But 4x25 is simple and works.

Harry advocated a portfolio of:

25% Stocks

25% 30 year treasury bonds

25% Cash

25% Gold

His book on the subject: https://www.amazon.com/Fail-Safe-Investing-Lifelong-Financia...

A more recent book: https://www.amazon.com/Permanent-Portfolio-Long-Term-Investm...

Reply on news.ycombinator.com